Ministers are facing criticism after the removal of the only black and Muslim members of the Equalities and Human Rights Commission from their posts, heightening fears that the coalition will place less emphasis on fighting discrimination.

Leading commissioners Simon Woolley and Lady Meral Hussein-Ece have discovered that their contracts as commissioners will not be renewed when they expire in December. Though both were invited to reapply for further terms by Lynne Featherstone, the equalities minister, before the reshuffle, neither has been shortlisted or called for interview.

There has been no explanation, but both Woolley and Hussein-Ece have raised concerns within the commission and outside about the effect of swingeing budget cuts being imposed on the statutory body and the effect of downsizing on the minorities who work there. Woolley and Hussein-Ece, vice-chair of the all-party parliamentary group on race and community, were appointed commissioners three years ago on two-day-a-week contracts.

Woolley has championed issues such as police stop-and-search and disability. He is also director and one of the founders of the organisation Operation Black Vote.

Woolley would say only that he was disappointed, while Hussein-Ece declined to comment. But MPs joined critics in denouncing the treatment of the commissioners and calling for the decision to be reversed. "There is a credibility gap opening up between the commission and black and minority ethnic communities," said David Lammy, MP for Tottenham and chair of the parliamentary group on race and community. "Simon and Hussein-Ece represent senior mainstream campaigners who have had cross-party respect. It is unfathomable that they were not called for interview and confirms deep fears … that the commission is turning its back on race issues."

Diane Abbott, the shadow public health spokeswoman, said: "It's very worrying. Simon has a wonderful record working with all political parties and had a great reference. The fact that they wouldn't even interview him was a calculated insult. It seems to me that race is slipping off the agenda at the commission."

Lester Holloway, an executive member of the grouping Ethnic Minority Liberal Democrats – once chaired by Hussein-Ece – said they would be pursuing the matter. "A commission without Meral and Simon is like a train without a track. Looks like another nail in the EHRC's coffin from the undertakers in the coalition."

The move is also being opposed by the unions. "It is interesting that Simon Woolley has opposed the frontloading of cuts that would see many disabled and minority staff losing their jobs," said Sue Bond, vice-chair of the Public and Commercial Services Union and trades union chair at the commission.

"We have no assurance that a new board will itself have the diversity it needs to champion equality. We urge the government to think again."

The commission has appointed Lady O'Neill as part-time chairman to replace Trevor Phillips, whose term ended last month.

The revelations intensify widening concern about the impact of coalition cuts at the commission. Last month, officials from the United Nations warned that the body could lose its "A-list" status, which would mean the UK could no longer fully participate in the UN human rights council or work within the international co-ordinating committee. Almost all western European nations carry A-list status.

The government has earmarked a budget of £26.8m for the commission in 2014-15, a 62% cut to its 2007 budget of £70m. Some fear that as spending cuts deepen and reflecting Tory scepticism about much of the commission's remit, the budget could be driven as low as £18m.

A government source said: "The EHRC is undergoing a period of reform now being lead by Lady O'Neill. A new board will be appointed shortly and those on the shortlist reflect a variety of diversity and expertise.

"Those currently on the board due not to have an extended term will remain until the recruitment process is complete. The government is hugely commited to the EHRC's future and its unfortunate that people would seek to make a political argument on an issue the coalition government is on agreement over."